Abstract

We study three topics on corruption that are of particular relevance to sub-Saharan Africa.Firstly, we address the question of why corruption is such an endemic problem in sub-Saharan Africa. Is it policy driven or "destiny"? We analyse indices of perceived corruption and test several theories regarding the causes of corruption. We find strong support for two arguments: Countries with a British heritage are perceived to be less corrupt, while those with a common law system are perceived to be more corrupt. We find weaker support for four further arguments: Countries with good quality institutions and a greater proportion of women in the labour force are perceived as less corrupt. Countries with greater natural resource abundance and with greater trade openness are perceived to be more corrupt.Secondly, we look at the supply side of bribery. Within the public procurement process, we study how a firm's uncertainty regarding the official's corruptibility and rival firms' costs influences the magnitude of the bribe it offers. Due to the illegal nature of bribery, we also explicitly consider different punishment mechanisms for corrupt firms. We find that secrecy leads to lower bribe levels, and that bribery can be completely deterred by either appropriate fixed fines or by firms being fined punitive damages.Thirdly, we investigate whether more corrupt governments receive less aid. We develop a theoretical framework that treats corruption as a tax on aid. Although we are unable to empirically test this model, we use it to motivate our empirical analysis of aid receipts using data on sub-Saharan Africa. We find a negative correlation between a country's perceived level of corruption and its aid receipts. However, we find no causal effect of perceived corruption on aid receipts. We revisit the results of an influential paper in the literature and find that their result of no evidence that countries perceived as more corrupt receive less aid is not robust to a sample of sub-Saharan African countries, although we find no evidence of a causal effect. We find no evidence that the impact of perceived corruption on aid receipts differs across sectors.